Impact of Globalization on GMS
Public Sector
Assoc. Prof. Dr. Wongsa Laohasiriwong
Khon Kaen University
Globalization : Introduction
– What is it? What are its key causes?
– Why is it expanding rapidly?
– What is its impact on: jobs, incomes,
labor policies, environmental policies,
national sovereignty?
– How does it impact international
business leader’s opportunities and
challenges?
– What is the impact on the public sector?
(Source: 2004 The McGraw-Hill Companies, Inc.)
Sources
• Dr. Christopher Gan, Impact of Globalization on GMS
Public Sector, 2008.
• United Nations, World
public sector report,
Globalization and the State , Department of
Economic and Social Affairs, 2001
Globalization
• An increasing and
intensified flows
between countries
of
- goods
- services
- capitals
- ideas
- people
* National cross border
integration of
- economic
- political
- social and cultural
activities
Source: World public sector report, Globalization and the State 2001, United Nations, Department of Economic and Social Affairs,
2001
Globalization
• Globalization used to be defined as the idea of
“ worldwide activities and the process of financial
in other markets all over the world.”
• Economists defined globalization as “the free
movement of goods, services, labour,
communication, information technology and
capital across borders.”
(Nissanke and Thorbecke, 2007).
Globalization
• Activities in economics, politics, sociology,
mass media, and cultures beyond borders.
Example,
• operations of worldwide organizations
such as the World Bank, UN, IMF;
• multinational companies such as Microsoft
and McDonald's,
(Zolo, 2007).
Globalization
"the diminution or elimination of
state-enforced restrictions on
exchanges across borders and
the increasingly integrated and
complex global system of
production and exchange that
has emerged as a result."
Source: Tom G. Palmer, 2002
Driving forces for Globalization
•Trade and investment liberalization policies,
•Technological innovation and reduction in
communication and transportation cost,
• Entrepreneurship,
• Global social networks.
Impact of Globalisation
• National economies less isolated due to:
– Lower cross-border trade and investment
barriers,
– “Smaller” geographic and time (zones)
distance,
– Fewer national government regulations,
– Less idiosyncratic business systems,
– Lower impact of national culture differences.
(Source: 2004 The McGraw-Hill Companies, Inc.)
Impact of Globalization
• Fast developments on information,
communications technology and money flow
faster than ever (Sundaram, 2006).
• strong impacts on the diversity of cultures
three factors:
1, to increase technological change, mobility of
capital, transport and communication,
2, to increase global cultural flows and retain
cultural heterogeneity and
3, to increase of social networks.
Amin and Thrift(1994)
Impact of Globalization
• Has the potential to transform the
traditional ways in which organisations
and people operate, co-operate and
interface
• This can lead to
– Faster growth
– Higher living standards
– New opportunities
(Source: United Nations, Department of Economic and Social Affairs, Division for
Public Economics and Public Administration, 2001)
Globalization Has Created
Three Major Gaps
 Values Gap
(Great disruption)
 Institutional Gap
(Rules of the game)
 Organizational Gap
(Governance)
The gaps need to be filled together
through global partnership
(Source: W.H. Reinicke, Global Public Policy and International Organization)
Impact of Globalisation
• Governments should pursue policies that encourage
integration into the global economy while putting in
place measures to help those adversely affected by
the changes
• For example,
• Many Hong Kong apparel manufacturers have moved
plants to a bordering low income province of China
(Guangdong), where workers are often paid by piece
rate, given below minimum wage compensation, forced
to work overtime and charged through payroll
deductions for food and lodging.
Sources: 4Guendelman, S and Jasis Silberg, M (1993) The health consequences of maquiladora work:
women on the US-Mexico border. Am J Pub Health, 83(1):37-44.
http://www.maquilasolidarity.org/resources/maquilas/china.htm)
Key Global Challenges Require Partnerships
Governance
- Corruption
- Trade
- Economic Management
- Security
Infrastructure
- Telecomm
- Power
- Water
- Transport
Private Sector
Development
- Banking
- Foreign Investment
- Corporate Citizenship
Human
Development
- Health
- Education
- Nutrition
- Social
Protection
Social Dev.
- Culture
- Gender
- Civil Society
Environment
- Biodiversity
- Desertification
- International Waters
- Deforestation
- Global Warming/Ozone Layer
The Globalization Challenge
Response
• Fragmentation of
international politics vs.
Integration of the global
economy
• Knowledge replaces mass
production as main source of
national wealth
• Massive deficit in global
public goods
Global
institutional
adjustment
New
Development
Paradigm
Re-orientation
of Development
System
(Source: W.H. Reinicke, Global Public Policy and International Organization)
World Trends in Public Sector Reform
Motivation for reform
– Rising costs of Government and the Public
Service
– Increasing Tax Burden and Erosion of
confidence in the Government
– Principal exponents of the New Public
Management movement
(Source: United Nations, Department of Economic and Social Affairs, Division for Public
Economics and Public Administration, 2001)
World Trends in Public Sector Reform
Characteristics of
New Public Management
• “People come first”
– focus on results
– service to the public
– delegation of authority
– greater attention to cost efficiency and
effectiveness
– Involving the private sector such as publicprivate partnership or contracting out.
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public
Administration, 2001)
The New Development Paradigm
Development as social transformation and institutional adjustment
Perceptions
Beliefs
Institutions
Organizations
Values
Rules
Changing
Reality
Exogenous
Players
Policies
Institutional
Physical
Human
A new concept of capital
Financial
Social
(Source: W.H. Reinicke, Global Public Policy and International Organization)
Natural
A Comprehensive Development Framework
(Source: W.H. Reinicke, Global Public Policy and International Organization)
Clean Government
Sound Judiciary
Macroeconomic
Management
Financial Sector
Power
Water
Private Sector Development
Health
Education
Transport
Social Dev.
Culture
Gender
National Resource
Management
Rural Development
Urban Development
A Comprehensive Development Framework
(Source: W.H. Reinicke, Global Public Policy and International Organization)
Clean Government
Sound Judiciary
Macroeconomic
Management
Financial Sector
Power
Water
Private Sector Development
Health
Education
Transport
Social Dev.
Culture
Gender
National Resource
Management
Rural Development
Urban Development
The Asian Experience
• Tradition of a Strong State administration and a
popular view of the State as having a major
responsibility for socio-economic development
– there is less mental resistance to State
intervention
• Asian values and cultures focus on
– importance of the family and community
– respect for authority
– consensual decision making
• Recognises the importance of public sector reform
but apprehensive in adopting western public
management models
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public
Administration, 2001)
Equitable and Sustainable Development: A Mix of
Hierarchy, Competition and Cooperation
(Source: W.H. Reinicke, Global Public Policy and International Organization)
Hierarchy
(State)
A
B
D
Competition
(market) (exit)
A. Government
goods
B. Toll goods
C. Public goods
C
E
F
Cooperation
(civil society) (voice)
D. Private goods
E. Civil goods
F. Common pool goods
Impact of Globalisation on Public Sector Reform
• Spread of global markets
• Experience of fiscal deficits and the need to control
budget deficits
• Growth of multi-lateral institutions and partnership
• Democratisation process.
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public Administration, 2001)
Public Sector Reform: Involves
• Capacity - Building alters the structures, methods,
process and operations of public administration,
making new demands on public servants
• Re-engineering the institution-building process
– Emergence of new triangular relationship between
the State, the private sector and the individual,
together with the rise of an active civil society.
• Human Resource Management
– Public servants, to meet these new demands at all
levels, are challenged to develop a new
configuration of competencies, skills, attitudes and
values
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public Administration, 20
Redesigning the Structure of Government
Impact of Globalisation
Excess of new institutions Pressure for more
participation in decision making
Resulting Impact
– de-bureaucratisation
– Decentralisation
– Democratisation
• Transformation of institutions from, closed,
rules-bound, formalistic to responsive,
flexible, user friendly administrations.
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public Administration, 2001)
Human Resource Development
• Impact of Globalisation
– shift from traditional bureaucratic to managerial
model
– demanding new human resource capacities in the
public service
• Civil Service Reform
– Transformation of personnel management processes;
recruitment, career development and succession
planning
– Pay reform
– Continuous learning and adequate training
• To build a framework able to attract, retain, develop
and motivate personnel of the appropriate calibre for
service to the government and to the country.
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public Administration, 2001)
The Knowledge-based Administration:
A Revolution in Management
• Information Technology as, a Tool for Policymaking and for the Delivery of Public Sector
services
• Performance indicators for Benchmarking and
Best practices
• Cutting across all above is the issue of
efficiency and effectiveness
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public Administration, 2001)
Public Sector Reform Demands a Holistic
Approach
• A Change of Mindset …
– to move away from the sense of inevitability of
globalisation with a limited role for the State
• A Clear Response
– that includes both institution building and humanresource strengthening in the pubic sector
• An Appropriate Response…
– as there is no “one size fits all” solution
(Source: United Nations, Department of Economic and Social Affairs, Division for Public Economics and Public Administration, 2
Globalisation – GMS Response
• What should policymakers, especially GMS
policymakers, do to reap the benefits of
economic globalization?
• From IMF recommendations:
–
–
–
–
–
–
sound macroeconomic policies
better governance
legal and financial reform
Privatization
price liberalization
infrastructure investment
(Source: Stanley Fisher, IMF, January 2001)
Globalisation – GMS Response
• GMS leaders must also
– Switch to globalization attitudes
– Be ready to move from worldwide presence to
global operation
– Be ready to move from rules governed management
to “coaching-oriented” leadership
– Be ready to observe and listen to the market to
understand the market rules
Globalisation – GMS Response
• Improve the broader business environment for
services to increase incentives for innovation and
foster demand:
– Continue with regulatory reform
– Open international markets
– Provide an appropriate financial climate
• Help workers adjust to structural change:
– Reform labour markets
– Help workers acquire new skills and competencies
• Foster innovation and technological change:
– Consider how innovation policies need adjustment
– Remove barriers to the effective use of ICT
(Source: Nobuo Tanaka, OECD, June 2005)
Globalisation – GMS Response
• What should policymakers, especially GMS
policymakers, do to reap the benefits of
economic globalization?
• From IMF recommendations:
–
–
–
–
–
–
sound macroeconomic policies
better governance
legal and financial reform
Privatization
price liberalization
infrastructure investment
(Source: Stanley Fisher, IMF, January 2001)
Globalisation – GMS Response
• GMS leaders must also
– Switch to globalization attitudes
– Be ready to move from worldwide presence to
global operation
– Be ready to move from rules governed management
to “coaching-oriented” leadership
– Be ready to observe and listen to the market to
understand the market rules.
Globalisation – GMS Response
• Improve the broader business environment for
services to increase incentives for innovation and
foster demand:
– Continue with regulatory reform
– Open international markets
– Provide an appropriate financial climate
• Help workers adjust to structural change:
– Reform labour markets
– Help workers acquire new skills and competencies
• Foster innovation and technological change:
– Consider how innovation policies need adjustment
– Remove barriers to the effective use of ICT.
(Source: Nobuo Tanaka, OECD, June 2005)
Road
Transport
Network
1992
Road
Transport
Network
2006
Road
Transport
Network
2015
1992
2004
2012
Power Transmission Line
Telecommunications
Backbone
Opportunities of Globalization
• Global social awareness and opportunities
for democracy
Trends and Challenges
• Alleviation of poverty and inequalities.
Trends and Challenges
• Advancement of human rights and
democracy.
Trends and Challenges
• Protection of environment and sustainable
development.
Trends and Challenges
• Mobility of labor and migration.
Trends and Challenges
• Demographic trends and impact of HIV/
AIDS.
Trends and Challenges
• Bridging the digital divide.
Trends and Challenges
• Combating international criminal networks.